A Below Market Value (BMV) property is one that is listed for sale at a price lower than comparable properties in the same area. Essentially, it presents itself as a bargain opportunity, often delivering on that promise.
However, caution is advised, as sometimes there are underlying issues prompting a quick sale, such as costly structural problems or potential damage like dry rot. Hence, it’s crucial to conduct a thorough survey before committing to a purchase.
Factors Influencing Below Market Value Pricing:
- Repossession: Properties may be repossessed due to owners failing to keep up with mortgage payments. In such cases, banks aim for a swift sale to recover some of their losses.
- Financial Distress: Owners facing financial difficulties may opt for a quick sale to alleviate monetary pressures.
- Relocation: Some owners may be moving abroad or changing jobs, necessitating a speedy sale to facilitate their transition.
- Renovation Needs: Properties requiring extensive renovations, including major structural work, may be priced below market value as the current owner lacks the resources or inclination to undertake the necessary improvements.
Identifying BMV Properties:
- Comparative Analysis: Research recent sale prices of similar properties in the area to gauge the market value. This provides a benchmark for evaluating whether a property is indeed priced below market value.
- Professional Evaluation: Hire a local surveyor with knowledge of the area’s market trends to conduct an evaluation report. Surveyors typically base their valuations on recent sales data, offering insights into a property’s true value.
- Engage with Estate Agents: Contact multiple estate agents, posing as both a buyer and a seller, to gather information on property pricing. Discrepancies in their responses may hint at potential below market value opportunities.
How Can Below Market Value (BMV) Properties Enhance Your Profits?
There are several avenues through which BMV properties can boost your earnings:
- Instant Equity: Acquiring a BMV property can yield immediate equity. For instance, purchasing a property for £100,000 with a market value of £120,000 results in an instant profit of £20,000.
- Higher Rental Yield: BMV properties often offer higher rental yields. For example, if a property purchased for £80,000 generates a monthly rent of £700, the rental yield stands at 10.5%, surpassing the 8.4% yield from a property bought at market value for £100,000 with the same rental income.
- Profitable Resale: Selling a BMV property can lead to substantial profits. Selling a property bought for £100,000, valued at £120,000, allows for a profit of £20,000.
Where Can You Find BMV Properties in the UK?
Given the allure of BMV properties to investors, it’s essential to identify where such properties can be found in the UK. Here are some key avenues:
- Auctions: Many BMV properties are auctioned, catering to sellers seeking swift transactions. Prior research and setting a maximum bidding price are vital steps.
- Estate Agents: Certain estate agents specialise in BMV properties and maintain networks of sellers requiring prompt sales. Engaging with local agents can yield insights into available BMV properties.
- Property Portals: Platforms like Rightmove and Zoopla feature listings inclusive of BMV properties. utilising price filters on these portals streamlines the search for below-market-value deals.
- Direct Mail: Employing direct mail to reach motivated property owners can effectively unveil BMV opportunities. Leveraging resources like the Land Registry aids in identifying landlords with multiple properties or long-term property owners.
- BMV Market!
Investing in BMV properties in the UK presents opportunities for instant profits or heightened rental yields. Auctions, estate agents, property portals, and direct mail campaigns serve as effective channels for locating BMV properties. However, thorough research is imperative to ensure that the chosen investment aligns with your objectives and yields a favourable return.
